Eurozone Inflation


Eurozone: Data from September ignites new fears of deflation

October 16, 2015

According to more complete data released by Eurostat on 16 October, harmonized consumer prices in September rose 0.2% over the previous month. The reading was up from the flat reading registered in August and was in line with market expectations. According to Eurostat, the prices of all items that comprise the basket of goods increased over the previous month, except those for energy.

Despite the monthly increase, HICP consumer prices in September fell 0.1% over the same month last year, which confirmed the Eurostat flash estimate and came in below the 0.1% increase tallied in August. The result—the first negative since March—was not welcoming news for European monetary authorities as the sub-zero inflation reading will likely pile additional pressure on the European Central Bank (ECB) to conduct further easing measures. Governing council member Ewald Nowotny of Austria recently stated that more needs to be done to support inflation and push it up toward the ECB’s target of below, but close to 2.0%.

At a country level, 11 of the 19 Eurozone economies showed inflation rates equal to or below the regional average. Cyprus (-1.9% year-on-year), Lithuania (-0.8% yoy) and Slovenia (-1.0% yoy) were the economies with the lowest rates. In contrast, Belgium (+0.9% yoy), Malta (+1.6% yoy) and Portugal (+0.9% yoy) were the economies that registered highest inflation rates.

Among the largest economies in the Eurozone, in Germany consumer prices fell 0.2% annually in September (August: +0.1% yoy), while in France consumer prices remained unchanged at August’s 0.1%. Meanwhile, in Italy HICP inflation dropped from 0.4% in August to 0.2% in September, while in Spain it plunged to minus 1.1% annually from August’s minus 0.5%.

FocusEconomics Consensus Forecast participants see inflation in the Euro area averaging 0.2% in 2015, which is up 0.1 percentage points from last month’s forecast. For 2016, panelists expect inflation to average 1.3%.

Author:, Senior Economist

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Eurozone Inflation Chart

Euro Inflation by country September 2015

Note: Year-on-year var. of harmonized consumer price index (HICP) in %.
Source: Eurostat

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